Finance, Taxes, Insurance
Flight Options Finally Wins IRS Management Fee Tax Case
Decision reverses opinion that would have resulted in a $39 million judgment

The case of Flight Options versus the U.S. has finally been resolved, according to a May 27 filing from the United States Court of Appeals, Sixth Circuit.

Flight Options was a fractional-share flight operation founded by Kenn Ricci that later merged with Raytheon Travel Air, and was eventually acquired by Ricci's Directional Aviation Capital. In 2007, Flight Options was subject to a federal excise tax audit by the Internal Revenue Service (IRS), which claimed that the excise taxes that apply to commercial (including Part 135) flights—the so-called 7.5% “ticket tax”—should be assessed for other costs such as management fees. The IRS’ move to tax ancillary fees also ensnared NetJets and Bombardier, which then had its own fractional-share operation.

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